![Build-to-Rent growth eases as sector continues to face challenging economic conditions BTR 622](https://barcadiapublications.fra1.cdn.digitaloceanspaces.com/property-reporter/img/article/btr_622-14804.jpg?v=3948931ae94ed95ded56716ef232005e)
"Regional growth in BtR is promising as the sector continues to expand beyond the traditional urban locations to secondary cities and towns"
BPF analysis has shown that the total number of BtR homes in planning, under construction, or completed continues to increase year-on-year, but the pace of growth has slowed from a long-term average of 28% year-on-year to 9%. The analysis, carried out by Savills, shows that the regional BtR market has grown at double the pace of London in the last year (12% vs. 6%).
BtR has continued to expand across the UK in the last quarter, with 186 (49%) of all UK local authorities having BtR in their planning pipeline. Across the UK, over two-thirds (68%) of BtR is in planning, remaining relatively consistent year-on-year. This comprises 45% of all BtR homes in England, rising to 71% in Scotland. The regional planning pipeline is much stronger than London’s, increasing 4% quarter-on-quarter and 11% year-on-year to 78,175 homes.
Recently introduced rent controls in Scotland have dampened investor confidence in the market, which could result in fewer homes proceeding from planning to construction in the coming months. Broader challenges with the UK planning system, including changes to government policy and resourcing at the local authority level can make securing permission protracted and coupled with build cost inflation, rising interest rates, and labour shortages, could also contribute to an under-delivery of new homes.
While several of the challenges that started to impact the construction sector during 2022 have continued into 2023, BtR continues to demonstrate its resilience, and it holds a critical role in helping to meet housing needs. New starts in the market have slowed in the last quarter, primarily in the regions where over 33,880 units are already under construction.
Ian Fletcher, Director of Policy, British Property Federation, comments: “Build-to-Rent is a critical part of meeting housing needs in the UK and it is positive to see that the sector is continuing to grow in the face of several macroeconomic and sector-wide challenges. The planning pipeline continues to be robust, but there is an urgent need to deliver more of those homes, to alleviate pressures on renters. Regional growth in BtR is promising as the sector continues to expand beyond the traditional urban locations to secondary cities and towns.”
Guy Whittaker, Associate at Savills, added: “After four consecutive years of record-breaking investment, it’s no surprise that the latest quarter’s data shows the number of homes under construction still at an all-time high, at just shy of 49,500 homes. This growth looks set to continue: our recent survey of the European investment community found that by 2025, half of all investors - up from 37% today - expect over 25% of their assets under management to be allocated to the ‘living’ sector.
“The geographical reach of Build-to-Rent has also continued to grow: a quarter of local authorities currently have homes under construction, compared to 10% in 2017. This has been supported by the emergence of Single Family Rental which enjoyed a record quarter in Q1 2023, with nearly £500m invested.”